The concerns were still great when Ursula von der Leyen made the plan her own. Russia and its oligarchs would have to compensate Ukraine for the destruction, they would have to bear the cost of reconstruction, she said at the end of November: “We have the means to do it.” 300 billion euros in reserves of the Russian central bank are blocked and 19 billion euros in oligarch funds. The EU Commission President decided that these sums could be invested. “We would then use the proceeds for Ukraine,” she said. Would it be possible to force the Kremlin to pay for reconstruction this way, even during the war?
For the first time, an answer to this seems within reach. Von der Leyen announced on Wednesday that he intends to present a proposal before the summer break on how sanctioned Russian assets could benefit Ukraine. She left the details open. She no longer spoke of simply investing the money. The government in Kiev has been putting pressure on the issue for a long time and knows that its Eastern European allies are by its side. EU Council President Charles Michel has spoken out in favor of this, as has foreign policy chief Josep Borrell. But skepticism prevails among the EU countries. The plan is risky, no option is without a hitch, and any use of assets belonging to Russia would be uncharted legal territory.
After Russia’s attack on Ukraine, the EU froze money from the Russian central bank
After the start of the war, the western alliance reacted with unprecedented sanctions, against oligarchs and politicians and against the Russian state. There are trade bans, price caps and, with the EU’s eleventh sanctions package, new measures against sanctions circumvention.
Immediately after Russia’s attack on its neighbor, the EU and its partners froze the Russian central bank’s foreign assets. The figure of 300 billion dollars is based on estimates, essentially based on documents from the Moscow central bank that were still published on a regular basis at the time. Two thirds of these assets were located within the EU. And there, in turn, a large part is held by so-called central securities depositories – companies that manage securities and other assets on behalf of banks like huge safes.
The original idea of confiscating the blocked central bank assets and using them for Ukraine is now off the table. That would have been a novelty and a breach of international law that could have had dire consequences for confidence in the euro and for financial stability. On the one hand, other states could act in the same way and confiscate European assets – and on the other hand withdraw their money parked in Europe as a precautionary measure. The role of the euro as a reserve currency would be jeopardized.
Investing the money is difficult, and a tax for trustees would probably do little
The idea of investing the Russian money in order to transfer the proceeds to Ukraine is also unlikely to be implemented. Because the EU would bear the risk, with an almost inconceivable obligation to pay compensation if it made losses in the process. It is also unclear whether these profits are also owned by the Russian state.
Only a third possibility remains: One could impose a special tax on the trustees who house the money. Because while they are not allowed to move the sanctioned assets, they earn money from it. They are allowed to collect this profit. Compared to the other two options, however, this would result in a manageable sum of millions, which would hardly help given the immense need for aid money for Ukraine. It is already clear that the reconstruction will cost at least several hundred billion euros.
Also: If the Commission makes a proposal, the Council of Ministers would have to deal with it and find a common position. It takes a lot of time to implement.
In the end, nothing more could remain of the big announcements made by der Leyens and other EU representatives than a symbolic act. The Council shows little interest in questioning state immunity – which would be affected by the confiscation of Russian assets. According to an EU diplomat, some of them probably decided too early and can’t get over this rhetoric now.
In comparison, the eleventh package of sanctions is much more concrete. After months of tough negotiations in the Council, the representatives of the member states came to an agreement on the matter on Wednesday. The corresponding papers, which are to be finally approved by Friday, are in place Süddeutsche Zeitung before.
According to this, the EU can in future restrict exports to certain third countries to circumvent sanctions. The focus is on Kazakhstan, Armenia, the United Arab Emirates and China. Companies from the People’s Republic are no longer on the sanctions list. There had been a diplomatic dispute over this. Only three suspected Russian front companies based in Hong Kong remained.